• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Sources of Finance

Extracts from this document...

Introduction

Sources of Finance Obviously to start my business I will need a large amount of capital which will could be gained through a number of methods which I will describe below pointing out the advantages and disadvantages of each one and then deciding whether it would be a good choice for the business. > Overdraft - This is a sum of money borrowed from the bank, usually for the purchase of small things such as stock, the advantages is its easy to obtain and quick however the main disadvantage is that you are charged daily interest on the money borrowed. This could be useful to the business once it is operating and making a profit however it would not be wise to get into debt with daily interest so early in the business's life > Share Issue / Investor - This is the sale of part of the business for an amount of capital, the advantage is that it is quick and sometimes the investor can also help and/or offer advice, however an obvious disadvantage is that you are loosing complete ownership of the company. ...read more.

Middle

Trade credit is definitely something that my business could use as a source of finance at the start as it could then use the capital it has for other purposes > Hire purchase - Hire purchase is obtaining an item through monthly payments, however the business does not own the item until it has been totally paid for, the advantages of this system is that the business does not have to pay immediately. The disadvantage however is that interest has to be paid on the payments back and therefore the business will end up paying more than if they had just bought the item in the first place. Hire purchase is something that my business could consider however the sort of stock and items that is needed in a sports shop are not really the sort of items that would be bought on hire purchase. > Grants - Grants is capital gained for free, usually given by the local or European government, the advantage is of course the free capital which will help the business, also it does not have to be repaid. ...read more.

Conclusion

My business will not need a mortgage as I have chosen property two which was a lease property meaning that the only money which needs to be paid is the �20,000 per annum fee. > Lease - A lease is where an item is rented for a monthly or annual fee, the advantage is that lease products usually come with a 24 helpline and maintenance service, and also when the product becomes outdated you can just lease a better model etc. However the disadvantage is that the business does not actually own the product, and never will. Personally I feel that leasing an item is a good idea and if the situation where a suitable item is needed for my business I will try and lease it. In the above points I have stated which sources of finance are most suited to my business and why, I will use these to gain the capital, stock and premises needed to start my business. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Accounting & Finance section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Accounting & Finance essays

  1. Marked by a teacher

    Business Finance. There are a number of sources of finance, which businesses will need ...

    3 star(s)

    to pay its debts. Advantages Advantages of using this method are, if the business is under a bad year (meaning they have not done well enough), the company is under no authorized commitment to pay shareholders. Unlike loans, whereby the principle has to be returned at the end of a

  2. Complete Report on Askari Commercial Bank

    Feed in Uni Bank System ACBL is computerized bank so after all the formalities the accounts are opened in computer in Uni Bank System. And AOF is pasted in AOF register.

  1. What does Finance involve.

    I will compare different companies to make sure I get the best deals and also to make sure that I have a back-up supplier in case the main company cannot supply my stock. I will then total all of these costs and this amount will be the total of my start up costs.

  2. Management Accounting Report.

    its competitors can pot the business down as once you put the prices up they put their prices down which will affect you sales. If the above questions are positive for the company I finally can recommend Oakdene Engineering to go with the actual price, which means they can keep

  1. Exploring business purposes

    In group three, I have chosen to gather information about BMW. I am now going to go through the same procedures as the other groups to answer the questions, using the internet for information. BMW Group activities worldwide are co-ordinated from the corporation's head office in Munich.

  2. This report has been produced as evidence for Unit 9 - 'Financial Services' - ...

    For example, if you use the card for convenience shopping and would want to repay the full balance at the end of the month, then cards that offer a long interest free period with no annual fee could prove more appropriate.

  1. Responsible accounting is the ability to conduct business in a way that is not ...

    STARTED AND COMPLETED YES YES ENDING INVENTORY YES NO The units that are finished this month are the "Beginning Inventory" and the "Started and Completed" units. The units that are started this month are the "Started and Completed" units and the "Ending Inventory".

  2. Personal finance - I am an advice worker for 'Life Start Bradford', which is ...

    Before you commit yourself, work through these steps: Think about your financial aims for the future, e.g. are you interested in? * saving for retirement * protecting your income in case you fall ill * saving for a rainy day * saving for something special (weeding)

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work